Insurance agents clashed with the Department of Agriculture'sRisk Management Agency at a Senate hearing today over a proposedpremium reductions plan they claim would destroy the crop insurancemarketplace.

Norman Nielsen, president of Preston, Iowa-based AssociatedInsurance Counselors Inc., speaking on behalf of the IndependentInsurance agents and Brokers of America was among those attackingthe proposal.

In testimony before the Senate Committee on Agriculture,Nutrition and Forestry, Mr. Nielsen said the RMA's PremiumReduction Plan (PRP) if fully enacted could potentially allowindividuals without the training of an insurance agent to sell theproduct.

"This is definitely a matter of crucial importance toindependent agents who sell crop insurance, as well as to farmers,but its ramifications go well beyond agents and farmers," saidPatrick O'Brien, director of federal government affairs for theIIABA.

Mr. O'Brien told the committee, "The bigger question here is ofinterest to all consumers and independent agents and brokers, whichis: whether individuals without the expertise and the statutoryqualifications required of insurance agents will be allowed to sellinsurance plans. This is potentially a very slippery slope, and itis crucial that Congress not allow it."

In his testimony, Mr. Nielsen also criticized the RMA forallowing one company, Des Moines, Iowa-based Crop1, to operate aPRP while denying others the right to establish their own programsuntil the system is completely reviewed.

"If this is RMA's idea of promoting competition in the industry,then the future looks very bleak for anyone involved in thedelivery of this important risk management program, and I shudderto think of the impact it will have on America's agricultureproducers," Mr. Nielsen said.

Also testifying at the hearing was RMA Administrator Ross J.Davidson, Jr., who defended the program's effectiveness.

"Farmers who purchased insurance using the PRP plan expressedappreciation for the lower premiums and consistently reported goodservice," Mr. Davidson said. "Additionally, Crop1 has a very goodrecord of compliance with the administrative requirements ofreporting policy information, remitting payments to FCIC andresolving discrepancies."

Mr. Davidson also said that several other companies filed arequest to begin their own PRPs last year, but that these requestsgave rise to "a number of implementation issues." The RMA proposeda regulation earlier this year, he said, and has received commenton the proposal both opposing and supporting it. Currently, headded, the rulemaking process "continues to move along in a timelymanner."

The House has made its opinion on the issue known, voting toapprove a provision that withholds funding for PRPs as part of its2006 agriculture spending bill. "We are hopeful that the Senatewill recognize the merit in this provision and include it in theoverall spending package that reaches the President's desk," saidMr. O'Brien.